From left, Jane Pardue of Balharbor Neighborhood Association; Cynthia Stanley-Cash of North Brainerd Neighborhood Association; and Lee Earl and Pat Barley of the Balharbor neighborhood oppose gains of the digital sharing economy across city neighborhoods. (Photo David Tulis)

Thick flak is bursting around Chattanooga as its Gig City global marketing brand, trailing smoke, drifts lower Tuesday before city council as that body plans to impose a land map on the Internet.

Chattanooga’s reputation as a forward-looking speedy Internet city hangs in the balance before a final reading and vote next week of a proposed ordinance that cuts the city into pieces and jealously squeezes old municipal formulas upon a voluntarist and digital source of new local wealth.

The so-called “overlay map” prohibits the free use of property among house holders outside the district. The measure is debated on its first reading, with no elected official insisting that free markets are a better route to future prosperity than are taxes, licenses, permits and surveillance.

The mapmakers, however, condescend to allow men and women in some parts of town to improve their livings with home rental cash flow. But city council plans to force others to shut down.

“What do we do with existing short-term rentals outside this area?” asks John Bridger, head of the city-county planning agency. “I understand there is a window of opportunity to apply for a period of time, and councilman [Chip] Henderson wants to add more to that [for those] who want to establish themselves legally as R-3 or R-4, there are opportunities for folks to do that.”

Questions about how their lines on a map may violate the “arbitrary and capricious” legal standard under constitutional government are not raised. The council member coming closest is Ken Smith. He worries about the loss of prospects of people outside the district who, as of today, seem to have lost the option of joining Airbnb or other private visitor platforms under the current rezoning process.

Mr. Henderson and city attorney Wade Hinton assure Mr. Smith the ordinance would begin Oct. 1, with a grace period.

Sheep and goats

The coerciveness of the plan gives pause to council members, as if at a precipice. By segregation they are dividing wheat from chaff, sheep from goats. In their readiness to act in the proposed paradigm, there is something of the blessing announced by God from Mount Gerizim, and the judgments for disobedience from Mount Ebal — from one slope all of good, from the other all of curses. ‡

Mr. Henderson says people on the good side of the line avoid cost and controversy, as ordained under the existing zoning rules if they use their private homes for the high-end Airbnb business. They pay fees, apply for a permit and deal with ostensibly minor irritations in getting going legally.

Those outside the pale would be banned from using what for many people is a chief capital asset, usually an expense that creates no new wealth except when sold in a rising market, with inflation enlarging the final net price. For these, rezoning to enter their properties into the digital marketplace and the sharing economy is outlawed.

The council gives a good deal of attention to a Henderson amendment that extends for one month the time for those on the wrong side of the map to apply for rezoning and effectively be within the map. For householders out of town, on vacation, asleep or somehow sitting on their rights, tough. They’re out. Their rights to Gig City are shot.

Though Mr. Henderson speaks in generous tones about how his plan allows city government to indulge in the Internet economy, these averments do not step outside the coercive control against private property and zoning authority, which is constitutionally suspect. His special district map is a fix for the unworkability of zoning control at its conception. Zoning gives people who bear no risk or cost of ownership authority to put their hands upon a property, though innocently, harmlessly and tort-free owned by another. However drawn, the map line is a meandering scar, with ruin on one side, submission to the city on the other.

Mr. Henderson and city council members want to alleviate some of the damage implied in zoning, without addressing the fundamental woe of external control over private property. To them that conflict is settled by taxing authority used to convert every lot from an allodium — land held free and clear — to a rental, where nonpayment of tax makes land revert to its real owner, the city.

An executive branch bureaucrat takes the podium to remind the people’s representatives their job will be to aggressively enforce the map.

Highlighting surveillance software is Donna Williams, appointed by Mayor Andy Berke to the Office of Economic & Community Development. Software will “scrape” the Internet for new arrivals in the home sharing economy so their illegal activity might be time-stamped and the property holders brought to knee.

“If they don’t comply, we will do what we always do, which is cite them to court,” she says. Nearly 600 people “in and around” Chattanooga have entered the sharing economy, Mrs. Williams says. Nine in 10 do so “illegally.” The city would outsource surveillance and compliance. These operators would “immediately send a cease and desist” to make people compliant, “and if they don’t do that, we will begin the enforcement part of the process.” The “cost of enforcement” would be about F$35,000 for the technology and labor, she says.

A party-crashing limit in constitution

What about homeowners in an area where “they’re not allowed?” The homeowner must close his business, or face citation. Member Carol Berz is concerned about how the Tennessee constitution’s $50 fine rule is any inhibition to a scofflaw.

A party found out of compliance faces a $50 fine only, but Mr. Hinton says it would be “at the discretion of the court” as to whether the F$50 fine can be made to accrue daily. The constitution says fines by a city are a maximum of $50 for an offense. The conversation before council was hopeful, that perhaps the rule could be twisted to increase the menace. Making the fine F$50 a day, or $350 for a week against someone out of compliance, seemed better to all. But such punishment violates the rule against arbitrariness, because the fine could also be F$50 an hour or $50 a second, which is inconceivable under the limits state government places against municipal corporations. Fifty dollars for an offense, no matter the clock. Cities have no punitive power, but fining power only akin to civil liquidated damages, according to City of Chattanooga v. Myers (1990) and City of Chattanooga v. Davis (2001). ‡‡

Us vs. them hostility to marketplace

For all the interest in economic development, much of the meeting is given over to the corporation’s antipathy to liberty as exercised already by the populace. Digital surveillance of short-term vacation rental sites is the best method of enforcement, Mrs. Williams says. A neighbor tattling on Mr. Bridger, or example, for renting out his house will not bring enforcement action, she says. Mr. Hinton says the city may have a “24-hour hot line” for complaints of “suspected activity” that the company will surveil for law enforcement and citation.

Mr. Henderson says the bill is an effort “to bring 21st century legislation” to address a burgeoning industry, a bill “that is going to address a problem, that is a good problem that we have here in Chattanooga. It’s a F$2.5 million industry *** that will bring additional revenue to the city.”

Councilperson Berz is particularly hostile to the possibility that property holders outside the proposed district might be able to sneak in with an Airbnb house before the ordinance takes effect. That would be done by petitioning for rezoning, which is allowed for an extra 30 days by a Henderson amendment.

Planner Mr. Bridger estimates no more than 10 percent of people now within the proposed district are “legal” in their sharing their houses with visitors.

Citizen critic speaks

Cynthia Stanley Cash is a resident who says zoning “protected our market value of our homes,” and tells the council studies show that introducing rentals into a neighborhood reduces valuations.

The president of North Brainerd Neighborhood Association proposes a procedural quagmire to slow online rental activity, demanding a “financial impact” report from Airbnb families to be written by real estate agents and examined by others at hearings. She asks the protection of “stronger enforcement requirements” to hamper the market. Her comments are focused on people outside the putative district.

But Mr. Henderson, repeating himself, gives to understand that his extra month is an act of grace to people who might be glad to have more notice about the loss of their rights to buy and sell.

“I’m just trying to extend that period and give people ample opportunity. I think this will show a good faith effort on this council that we tried to accommodate those people rather than just passing [the ordinance] and shutting it off.” The extra time: From the fourth Monday in June to the fourth Monday in July.

Mrs. Stanley-Cash is heartened that no one is “grandfathered” in to escape the trap. He assures her that once the bill passes, those outside the district “won’t even be allowed to apply.”

Mrs. Stanley-Cash is supported by Jane Pardue of the Balharbor Neighborhood Association and section residents Lee Earl and Pat Bartley. These and altogether 500 such critics, according to council member Darrin Ledford, have said they oppose Airbnb. In a separate interview, Mr. Ledford says he heard not a single voice in support of such services and the liberty they imply. In interviews Messrs. Ledford and Henderson say opponents of the free market are motivated by what they call safety concerns.

‡ Deuteronomy 27: 12, 13

‡‡ The constitution speaks of dollars (silver), but city council addresses the $50 fine rule in terms of Federal Reserve System dollars, a fiat currency of no known substance the value of which is in constant decline.

— David Tulis hosts a talk show 9-11 weekdays at Noogaradio 1240 AM 92.7 FM, covering local economy and free markets in Chattanooga and beyond.

People’s representatives defend controls vs. free market

City council members Chip Henderson and Darrin Ledford debate city government’s plan to rein in Internet activity in the Gig City, which touts its online speeds and access through a city-owned utility, EPB. (Courtesy Noogaradio)

About The Author

David Tulis hosts a talk show weekdays 9 to 11 a.m. on Noogaradio 92.7 FM 95.3 FM HD4 (digital), covering local economy and free markets in Chattanooga and beyond. Support this site and his radio station in Chattanooga, on your smartphone via the TuneIn radio app or at Noogaradio.com. Noisily patronize his advertisers. Also, “buy me a coffee at the tip jar.”